Death knell has sounded for many retail stores

Stark December could shutter 73,000 businesses in first half of this year

ANDREA JAME, Seattle Post-Intelligencer

By ANDREA JAMES, P-I REPORTER

Published 10:00 pm, Sunday, January 11, 2009

Christmas season is "supposed to take us through any of the lean months," says Science, Art and More owner Doug Livingston, of the store he's closing after 12 years.
Photo: Grant M. Haller/Seattle Post-Intelligencer

To his dismay, Seattle shop owner Doug Livingston saw his busiest shopping day in months last Tuesday -- the day after he announced that his store was liquidating. His business, Science, Art and More, did not make enough money over the holiday season to cover rent and the light bill for 2009.

"Christmas for us was 50 percent down, and for a retail store that's huge," Livingston said. "Usually the Christmas season is where we make what profit we do. It's supposed to take us through any of the lean months."

Retailers in December encountered a "perfect storm" of housing woes, rising unemployment, declining wealth and bad weather, retail analyst Amy Noblin said. "Even the best bargains we have seen in decades did little to stimulate conversion," she said.

The effects of the just-passed holiday shopping season will resonate throughout the first six months of 2009. As many as 73,000 retail outlets could close nationwide in the first half of this year, according to an estimate from The International Council of Shopping Centers. The trade group said that the holiday season was the weakest on record, according to data going back to 1970.

Livingston, 60, opened Science, Art and More in 1996 to combine his talents in teaching, business, science and art. Since then, teachers and parents have come to the store on Roosevelt Way Northeast in search of unique items such as real microscopes, science supplies and rock tumblers. After running it for 12 years, Livingston decided to put the three-employee business up for sale in early 2008.

But the credit crunch made it difficult to find a buyer. Meanwhile, the shop's customers stopped coming, or came and spent less.

"If I knew then what I know now, I probably would've moved on earlier, but basically the economic thing has hit everybody and has hit my customers very hard," Livingston said. "It's taken 12 years to build this, to put all this stuff together, so its going to take a little while to take it apart and find homes for everything."

"The recession may have triggered the avalanche, but the underlying culprit here is something that has been going on for some time," she said. "Every retailer, every developer, every new project had an opportunity to be profitable by cannibalizing existing sales at shopping centers or downtown."

American shoppers like what's new and big, and so independent retailers and downtowns have suffered because of overdevelopment, she said.

"What you see is these sort of successive waves of new retail formats," Mitchell said. "Retailers themselves lease, so they're fairly footloose."

The retailers with the best chance of survival are ones that are near a grocery anchor, have a good location, ease of access and ample parking, said Doug Clerget, an associate vice president at GVA Kidder Mathews who specializes in retail commercial real estate.

"We're really fortunate in the central business district of Seattle and Bellevue and even the Pacific Northwest," Clerget said. "We are a lot more insulated from a lot of the woes that are affecting the rest of this country."

The Seattle economy is going to suffer, he said, but not to the same degree as places without strong regional employers.

Retail vacancy rates in the region were 4.1 percent in 2008, and are expected to grow to between 5 percent and 6 percent in 2009, he said.

"A lot of people feel that we're heading into doom and gloom but we're really not," he said. "There is going to be some retail fallout, there are some stores that are going to go dark."

Location and previous management are probably what did in the Newport Hills Red Apple Market in Bellevue, said owner Lenny Rose, who remodeled the market after buying it six years ago, he said.

The store was "severely underused," said Rose, who owns parent company Rose and Associates LLC.

"We attribute lack of use up here to previous history," he said. "We're very good store operators."

The other two Red Apple Markets, both in Seattle, are doing fine, he said.

"We're trying to leave as graciously as possible," said Rose, 57. "Some people are very disappointed, but 99.9 percent understand why."